Aviation News

February 27, 2012

Iran Air to Raise $1.2 Billion Over Coming Weeks Through Privatization

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By: Matt Molnar
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An Iran Air Boeing 747SP. (Photo by Tom Alfano)
An Iran Air Boeing 747SP. (Photo by Tom Alfano)
More than half of Iran Air will be sold to private investors by March 19th, the government-owned airline’s managing director, Farhad Parvaresh, said on Friday.

Tehran Times reported that the government will sell 50 percent of the airline’s shares plus one additional share. The airline expects to raise about $1.2 billion through the sale, which it will use to buy newer aircraft and expand routes.

Perhaps just as important as the cash infusion will be the airline’s improved ability to purchase aircraft and parts. United States efforts to isolate Iran through trade sanctions include a ban on most sales of aircraft and aviation parts, a regulation that many blame for the country’s increasingly dreadful safety record. Iranian carriers, whose fleets include planes dating before the US broke ties with the country in 1979, have in the past used proxies in other countries to purchase more modern aircraft, including an Airbus A310 formerly used as Germany’s “Air Force One.”

In a Financial Times interview, Parvaresh said, “When Iran Air is privatized, our hands will be more open in dealing with sanctions and buying aeroplanes and spare parts.” While he did not say exactly how privatization would make imports easier, it’s likely Iran Air is courting foreign investors who would be able to import parts to their own country without restrictions, and then transfer them to Iran.

With the aging and stagnant fleets of the nation’s airlines unable to meet rising air travel demand, the Iranian government recently began allowing Qatar Airways to fly domestic routes within the country.